Chapter 6 Alternative Theories of Trade

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Chapter 6 Alternative Theories of Trade
Some new graphs in this chapter.
Link to syllabus
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Figure 6.1 p. 93. Scale Economies
new
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Declining Cost IndustryHigh Fixed Cost (100),
Constant Marginal Cost (2/unit)
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Figure 6.2 p. 96. Intra Industry Trade in the
US, 2006
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Figure 6.3 p. 97. Average Percentage Shares of
Intra-Industry Trade in the Countrys Total Trade
in Nonfood Manufactured Products.
new
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Figure 6.4, p. 100. Monopoly Element in
Monopolistic Competition
new
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Figure 6.5 p. 102. The Competitive Element in
Monopolistic Competition
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Figure 6.6 page 103 Monopolistic competitive
automotive firm, after opening to trade
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Figures 6.4, 6.5 6.6. The Competitive Element
in Monopolistic Competition
As other firms enter into the market, this firms
demand curve moves left, lowering prices and
profits.
Downward sloping supply curve Monopolistic profits
Opening the country to trade will further shift
the demand curve, further lowering prices.
lt-------------Domestic factors ---------------gt
Foreign competition
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Figure 6.7 page 104Auto market, without and with
free trade
Varying the number of models, and its affect on
prices, pre and post-trade
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Figure 6.8 p. 113. External Economies Magnify
anExpansion in a Competitive Industry
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Figure 6.9 page 115Summary of gains and losses
from trade in 3 models
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(No Transcript)
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Sample Calculations
Data on North-South trade.
9 p. 107 Chapter 6
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Calculations based on McConnell/Brue page 87.
Principal US exports and imports, 2005
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Figure 6.2 page 93Monopolistic competitive firm
before trade opens
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Figure 6.1 page 89Intra-industry trade, 1970,
1987
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Q. 9 p. 118